Research On The Influence Of Executive Compensation Of Listed Commercial Banks On Bank Performance In China

The separation of ownership and management in modern enterprises has led to the principal-agent problem.Compensation contracts guide companies to establish internal corporate governance mechanisms that link the executive compensation with the business performance of enterprises,so as to promote executives to obtain more compensation by improving the business performance of enterprises.At present,commercial bank executive compensation is given priority to with monetary short-term remuneration,medium and long-term incentive tools such as equity incentive is strictly limited by policy,the executive compensation term mismatch is likely to lead to bank executives pay more attention to short-term interests,and the pursuit of self-interest opportunism behavior,even to improve the management risk,and damage to the long-term development of the bank,in a sense could distort positive incentive pay system.As a highly regulated industry,the banking industry has diversified business objectives,Commercial Banks should not only pursue the growth of performance,but also cooperate with the national macroeconomic policies,guard against and defuse risks and assume social responsibilities.In such a complex internal and external environment,it is debatable whether the executive compensation system established by commercial Banks on the basis of agency theory,optimal compensation contract and other theories can really help improve the performance of Banks.Based on agency theory and incentive theory,this paper studies the impact of executive compensation on bank performance.By selecting 20 domestic listed Banks'data as sample,with reference to the performance indicators of commercial Banks be explained variable,executive compensation index as explanatory variables,at the same time,choose the bank security index,total assets and equity concentration control variables on the panel data collected by the use of fixed effects regression model.The empirical results show that,on the whole,the executive compensation of China's commercial Banks has a significant positive impact on the performance,that is,the executive compensation incentive for Banks can indeed improve the performance of Banks;However,the new round of salary limit policy implemented in 2015 has significantly inhibited the executive compensation incentive system of Banks.After commercial Banks are divided into state-owned and non-state-owned Banks,it is found that the incentive effect of the executive compensation of state-owned commercial Banks is significantly reduced,which indicates that the incentive effect of the executive compensation incentive system of state-owned Banks has not played its due role due to the salary limit policy.Based on the above research conclusions,it is suggested that the government should reduce administrative intervention in state-owned Banks and joint-stock Banks,and give commercial Banks enough independent decision-making power.At the same time,it is suggested that commercial Banks should improve the corporate governance structure,and formulate the executive compensation incentive mechanism suitable for talent training and risk control from the perspective of facilitating the implementation of their strategic goals and improving their competitiveness.